If you or a loved one is preparing for long-term care and considering Medicaid to help cover nursing home or in-home care costs, a recent federal appeals court decision could significantly affect your options. In Lancaster v. Cartmell (10th Cir., Dec. 23, 2025), the court ruled that the Medicaid Act does not give individuals a private right to sue state agencies in federal court when their benefits are wrongly denied.
The Facts of the Case
Max and Peggy Lancaster, an elderly Oklahoma couple, transferred $3.8 million in assets to a limited liability company (LLC) owned by their three adult children. In exchange, the LLC gave them a promissory note, mortgages, and personal guarantees. When the Lancasters later applied for Medicaid, the state denied their applications because the promissory note was counted as an available asset that pushed them over the eligibility limit.
The couple sued the state Medicaid agencies under 42 U.S.C. § 1983, claiming the denial violated the Medicaid Act’s requirement that eligible individuals receive benefits with “reasonable promptness.” They argued they had a private right to enforce that provision in federal court.The Court’s Decision
The Tenth Circuit Court of Appeals disagreed. Relying on the U.S. Supreme Court’s 2025 decision in Medina v. Planned Parenthood South Atlantic, the court held that the Medicaid Act’s “reasonable promptness” provision (42 U.S.C. § 1396a(a)(8)) does not create an individually enforceable right that beneficiaries can sue to protect.
If your Medicaid application is denied or delayed, you generally cannot file a federal lawsuit against the state agency. You must instead go through the state’s internal administrative appeal process.
The court emphasized that Medicaid is a spending-power statute between the federal government and the states. The usual remedy for violations is for the federal government to withhold funding from the state, not for individual beneficiaries to sue.Aging-in-Place Planning and Elder Law Planning Implications
This ruling tightens the rules for Medicaid eligibility challenges nationwide (at least in the Tenth Circuit, and likely influencing other courts). For families planning ahead:
Max and Peggy Lancaster, an elderly Oklahoma couple, transferred $3.8 million in assets to a limited liability company (LLC) owned by their three adult children. In exchange, the LLC gave them a promissory note, mortgages, and personal guarantees. When the Lancasters later applied for Medicaid, the state denied their applications because the promissory note was counted as an available asset that pushed them over the eligibility limit.
The couple sued the state Medicaid agencies under 42 U.S.C. § 1983, claiming the denial violated the Medicaid Act’s requirement that eligible individuals receive benefits with “reasonable promptness.” They argued they had a private right to enforce that provision in federal court.The Court’s Decision
The Tenth Circuit Court of Appeals disagreed. Relying on the U.S. Supreme Court’s 2025 decision in Medina v. Planned Parenthood South Atlantic, the court held that the Medicaid Act’s “reasonable promptness” provision (42 U.S.C. § 1396a(a)(8)) does not create an individually enforceable right that beneficiaries can sue to protect.
If your Medicaid application is denied or delayed, you generally cannot file a federal lawsuit against the state agency. You must instead go through the state’s internal administrative appeal process.
The court emphasized that Medicaid is a spending-power statute between the federal government and the states. The usual remedy for violations is for the federal government to withhold funding from the state, not for individual beneficiaries to sue.Aging-in-Place Planning and Elder Law Planning Implications
This ruling tightens the rules for Medicaid eligibility challenges nationwide (at least in the Tenth Circuit, and likely influencing other courts). For families planning ahead:
- Asset transfers and promissory notes are under even greater scrutiny. Strategies that rely on loans or notes to “spend down” assets may be counted as resources, leading to denials.
- Fewer legal protections if the state makes a mistake. Without the ability to go straight to federal court, families may face longer delays and more limited remedies.
- Stronger need for proactive planning. Once you apply for Medicaid, your options to fight a denial in court are now narrower. The best defense is careful planning before you need benefits.
- Aging-in-Place Planning Shines: Planning to age in place and avoid institutional care completely, with its attendant risks and costs, shines as a superior plan.
Practical Takeaways for Families
- Plan early: Ideally 5 years before you anticipate needing care. Work with an elder law attorney to structure asset transfers, trusts, or other strategies that comply with current Medicaid rules.
- Understand the appeals process: If you’re denied, request a fair hearing promptly. Time limits are strict, and you’ll need strong documentation.
- Document everything: Keep clear records of all transfers, notes, and communications with the state agency.
- Consider alternatives: Long-term care insurance, veterans’ benefits, hybrid life insurance policies, Medicare Advantage Plans, Private Caregiver Agreements, and Hybrid Annuities can reduce reliance on Medicaid and give you more control over your aging-in-place options.
If you’re concerned about Medicaid eligibility, nursing home costs, or protecting your home and savings while aging in place, don’t wait until a crisis hits. Schedule a consultation with a qualified elder law attorney. A small investment in planning today can save your family tens or hundreds of thousands of dollars and give you peace of mind tomorrow.
